What is The New Business Plan for Starbucks?

In March 2022, Starbucks published their

“commitment to a planet positive future through innovation and learnings from store partners”.

Efforts to reduce waste have been outlined, through reusable cup programs, waste and recycling app supporting partners’ sustainability efforts, and a new pilot program with Volvo to assist in electrifying a driving route from the Colorado Rockies to Seattle.


Starbucks President and CEO, Kevin Johnson stated that “We have a bold long-term sustainability vision and ambitious goals for 2030.” “Starbucks partners around the world are passionate about protecting our planet and are at the very centre of driving the innovation that enables us to give more than we take from the planet.” To reach their goal of reducing waste by 50% by 2030, Starbucks is implementing reusable cup programs, looking to discard single use plastics. Starbucks have implemented their interest to “by the end of next year” (2023), customers will use be able to use their own reusable cup for every visit – café, drive-thru, and mobile orders - in the US and Canada.


Developed by partners as part of the Greener Stores Innovation Challenge, the new Starbucks Partner Waste and Recycling App aim to help navigate complex recycling guidelines; putting everything needed to know to reduce waste and recycle in one place - with store specific information and sorting guides.


Along with this, the new pilot program with Volvo cars to provide places for customers to recharge themselves and their electric vehicles. By the end of 2022, Volvo branded electric vehicle charges, powered by ChargePoint, will be available at up to 15 Starbucks stores. This will be adding a much-needed peace of mind for electric vehicular drivers, also promoting the use of electric vehicles, as the limited charging infrastructures can be seen as major barriers in purchasing such.

Starbucks are testing multiple new programs to find a solution to single use cup waste. This includes the Borrow A Cup, 100% Reusable Operating Models, and Personal Cups & For-Here-Ware programs. Borrow A Cup consists of customers having to order drinks in a reusable cup, designed to be returned to stores, cleaned, then reused by other customers. 100% Reusable Operating Models see single use cups eliminated completely. Stores in Jeju prevented an estimated 200,000 disposable cups in the first 3 months. Personal Cups & For-Here-Ware encourage customers to bring their own cups, and emphasising the for-here-ware as the default sit-and-stay experience.


What Does This Mean for The Daily Consumer?

Starbuck’s goal of becoming a resource positive company sees extra 5p charges to customers for using their single use cups, while customers using reusable cups receive a longstanding 25p discount off any Starbucks drink. Funds raised from the 5p cup charges to all British stores will go on to support recycling and sustainability efforts with Hubbub environmental charity and behavioural change experts- with the focus to reduce plastic pollution and prompt customers to rethink how we use plastic. For customers who prefer or need straws made from alternative materials, such as paper or PLA compostable plastic.

Starbucks are exploring incentives for customer behaviour changes through multiple ways. Starbucks have offered free coffee to customers on National Coffee Day, and donated $1 to the ocean Conservancy organisation if customers brought in reusable cups. Stores in the Arizona State University campus are trialling cup washing stations for personal cups so customer can have their cups cleaned before ordering.

Why is The CEO Back for a Second Stint with Starbucks?

Howard Schultz took charge of Starbucks in 1980s and expanded from less than 20stores to more than 100, in 1992 he made the company public and by 2002, Starbucks had 2,500 locations in a dozen countries. In 2000, Schultz stepped down from CEO but remained as chairman. By 2007 Starbucks had opened more than 15,000 locations worldwide but started to struggle, so in January of 2008, Schultz returned as CEO. He closed 900 stores and implements new strategies to secure new growth avenues. This consisted of a bakery chain and the introduction of instant coffee brands. These strategies were rather successful, so by 2012 Starbucks had recovered financially. Schultz decided to step down again in 2017 and continued as chairman until 2018.

Starbucks was among the first US companies to feel the effects of the COVID pandemic when China implemented lockdown and the company had to close locations, this led to same-store sales falling in 2020 for the first time in more than a decade. In addition to this, Starbucks is facing an unprecedented unionisation drive in its US stores – with more than 130 stores petitioning to unionise. On top of this, the National Labour Relations Board filed a complaint against Starbucks for allegedly penalising two Arizona workers for union activity.


In a statement released by Starbucks, Schultz had said he had not planned to return to the company, but wants to help it transform again as the coronavirus recedes.

“When you love something, you have a deep sense of responsibility to help when called,” Schultz said. “Love and responsibility are what brought me back to Starbucks: my love of the company and my deep responsibility to our partners and shareholders.”

However, while Schultz only returned to Starbucks April 4th, he has expressed desires to find a new CEO to replace him next year, from outside the company- someone to add new talent and skills to its senior leadership ranks.


"For the future of the company, we need a domain of experience and expertise in a number of disciplines that we don't have now." Mr. Schultz said during an interview at the company's headquarters. "It requires a different type of leader."


"I don't look back. My eyes are looking forward," Mr. Schultz said.

How Will it Affect Starbucks in The Long Run?

Schultz shared on a call with investors that upon his return, “what you will see is the transformation of the Starbucks customer and partner experiences. The transformation will accelerate already record demand in our stores. But the investments will enable us to handle the increased demand – and deliver increased profitability – while also delivering an elevated experience to our customers and reducing strain on our partners. And we will reintroduce joy and connection back into the partner experience.”


Since his return as CEO on April 4th, executives have visiting retail partners to hear first-hand about their work and how their lives have been impacted over the last 2 years. From this, Schultz and his team of executives gain insight from employees on the operations and physical impacts on store experience.


Along with this, Schultz announced that investments have been designed to transform and elevate the Starbucks experience of Starbucks partners and customers. This includes the Coffee Master and Black Apron programs, which recognise employee’s commitment to excellence, an increase in opportunities for employees to be heard and have a voice through the employee app, additional and more effective training, increased pay and financial support and continuity in building and offering benefits based on employee input.

 

Edited and Reviewed by Deborah Ikomi

 

References/Wider Reading:


‘Starbucks affirms commitment to a planet positive future through innovation and learnings from store partners’,Starbucks Stories & News, [website], 2022, https://stories.starbucks.com/press/2022/starbucks-affirms-commitment-to-a-planet-positive-future-through-innovation-and-learnings-from-store-partners/, accessed 4 June 2022


The associated Press, ‘Howard Schultz returns to Starbucks as interim CEO’, Oregonlive, [website], https://www.oregonlive.com/business/2022/03/howard-schultz-returns-to-starbucks-as-interim-ceo.html, accessed 4 June 2022


C.O’Leary, ‘Howard Schultz’,Britannica [website] ,2022, https://www.britannica.com/biography/Howard-Schultz, accessed 4 June 2022


‘You pay for a cup, we reward for refuse’, Starbucks, [website], https://www.starbucks.co.uk/5PCUP, accessed 4 June 2022


‘Starbucks Commits $1 Billion in Fiscal Year 2022 Investments to Uplift Starbucks Partners (employees) and the Store Experience’, Starbucks Stories & News, [website], 2022, https://stories.starbucks.com/press/2022/starbucks-commits-one-billion-in-fy2022-investments-to-uplift-partners-employees-and-the-store-experience/, accessed 4 June 2022


H.Haddon, ‘Howard Schultz Says Starbucks Is Seeking Fresh Blood in CEO Search’, The Wall Street Journal, [website], https://www.wsj.com/articles/howard-schultz-says-starbucks-is-seeking-fresh-blood-in-ceo-search-11654488060, accessed 6 June 2022


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